8-K 1 pr1202.txt 4TH QUARTER 2002 EARNINGS RELEASE SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) January 29, 2003 FirstFed Financial Corp. (Exact name of registrant as specified in its charter) Delaware 1-9566 95-4087449 (State of Incorporation) (Commission File No.) (IRS Employer Identification No.) 401 Wilshire Boulevard, Santa Monica, California, 90401-1490 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310) 319-6000 ITEM 5. Other Events. On January 29, 2003, the registrant, FirstFed Financial Corp., issued a press release. A copy of this press release is attached and incorporated herein as Exhibit 99. Item 99. Press release dated January 29, 2003. S I G N A T U R E S Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRSTFED FINANCIAL CORP. Dated: January 29, 2003 By:/s/ Douglas J. Goddard Douglas J. Goddard Chief Financial Officer FIRSTFED REPORTS RESULTS FOR THE FOURTH QUARTER OF 2002 Santa Monica, California, January 29, 2003 -- FirstFed Financial Corp. (NYSE-FED), parent company of First Federal Bank of California, today announced net earnings of $14.3 million or $0.83 per diluted common share for the fourth quarter of 2002, compared to net earnings of $16.2 million or $0.92 per diluted common share for the third quarter of 2002 and $12.9 million or $0.73 per diluted common share for the fourth quarter of December 2001. Net earnings for the quarter ended December 31, 2002 include a $1.1 million recovery of interest income on charged-off and non-accrual loans and other adjustments to loan income. Net earnings for the third quarter of 2002 include income of $5.9 million resulting from a revised estimate of the Bank's repurchase liability for loans sold with recourse. Net earnings for the twelve months of 2002 were $55.2 million or $3.15 per diluted common share, compared to $50.3 million or $2.85 per diluted common share for the twelve months of 2001. Net earnings for the twelve months of 2002 include the aforementioned income resulting from the Bank's repurchase liability for loans sold with recourse. After tax, year-to-date earnings were increased by $3.4 million or $0.19 per diluted common share during 2002 due to this revised estimate. Net interest income increased by 3% and 2% during the fourth quarter and twelve months of 2002, respectively, compared to the prior year periods due to increased interest rate spreads. The interest rate spreads increased to 3.21% and 2.92% for the fourth quarter and twelve months of 2002 from 2.83% and 2.71% for the same periods last year as the cost of interest-bearing liabilities declined faster than the yield on interest-earning assets. The increased spreads compensated for declines in average earning assets. Due to continued high levels of loan payoffs, average interest-earning assets decreased to $4.1 billion for the fourth quarter and $4.3 billion for the twelve months of 2002 compared to $4.5 billion for the fourth quarter and $4.4 billion for the twelve months of the prior year. Loan originations were $417.7 million and $1.3 billion for the fourth quarter and twelve months of 2002 compared to $271.7 million and $1.5 billion for the same periods last year. Allowances for loan losses (including general valuation allowances and valuation allowances for impaired loans) totaled $75.7 million or 1.96% of the loan portfolio as of December 31, 2002 compared to $74.8 million or 1.83% as of December 31, 2001. Non-performing assets were 0.17% of total assets as of December 31, 2002, the same as December 31, 2001. The Bank did not record a provision for loan losses during 2002 or 2001. Net loan recoveries of $50 thousand and $950 thousand were recorded for the fourth quarter and twelve months of 2002, respectively, compared to net loan recoveries of $288 thousand and $118 thousand for the fourth quarter and twelve months of 2001, respectively. As of December 31, 2002, the Company had assets totaling $4.3 billion and consolidated stockholders' equity of $371.6 million. During the fourth quarter of 2002, the Company repurchased 119,600 shares of common stock at an average market price of $25.74. During 2002, the Company repurchased 353,000 shares of common stock at an average market price of $25.74. There remain 1,382,477 shares eligible for repurchase under the Company's stock repurchase program as of January 28, 2003. First Federal Bank of California operates 29 full-service retail banking offices and 4 loan production offices in Southern California. 1 This news release contains certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to various factors, many of which are beyond the Company's control, which could cause actual results to differ materially from such statements. Such factors include, but are not limited to, the general business environment, interest rate fluctuations that may affect operating margin, the California real estate market, branch openings, competitive conditions in the business and geographic areas in which the Company conducts its business and regulatory actions. In addition, these forward-looking statements are subject to assumptions as to future business strategies and decisions that are subject to change. The Company makes no guarantee or promises regarding future results and assumes no responsibility to update such forward-looking statements. KEY FINANCIAL RESULTS FOLLOW 2 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands, except share data) (Unaudited) December 31, December 31, 2002 2001 ---------- ---------- ASSETS Cash and cash equivalents $ 45,199 $ 174,171 Investment securities, available-for-sale (at fair value) 103,055 110,444 Mortgage-backed securities, available-for-sale (at fair value) 200,585 284,079 Loans receivable, held-for-sale (fair value of $2,300 and $5,250) 2,293 5,246 Loans receivable, net 3,766,942 3,999,643 Accrued interest and dividends receivable 17,752 22,076 Real estate 347 1,515 Office properties and equipment, net 10,342 10,822 Investment in Federal Home Loan Bank (FHLB) stock, at cost 78,728 91,713 Other assets 28,486 26,580 --------- --------- $ 4,253,729 $ 4,726,289 ========= ========= LIABILITIES Deposits $ 2,527,026 $ 2,546,647 FHLB advances 1,167,000 1,597,000 Securities sold under agreements to repurchase 155,273 211,040 Accrued expenses and other liabilities 32,789 45,924 --------- --------- 3,882,088 4,400,611 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, par value $.01 per share; Authorized 100,000,000 shares; issued 23,395,202 and 23,362,196 shares, outstanding 16,931,306, and 17,251,300 shares 234 234 Additional paid-in capital 35,680 34,670 Retained earnings - substantially restricted 418,885 363,713 Unreleased shares to employee stock ownership plan (597) -- Treasury stock, at cost, 6,463,896, and 6,110,896 shares (84,762) (75,930) Accumulated other comprehensive earnings, net of taxes 2,201 2,991 --------- -------- 371,641 325,678 --------- -------- $ 4,253,729 $ 4,726,289 ========= =========
3 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE EARNINGS (Dollars in thousands, except per share data) (Unaudited) Three months ended Twelve months ended December 31, December 31, --------------------- -------------------- 2002 2001 2002 2001 --------- ---------- -------- --------- Interest income: Interest on loans $ 58,112 $ 69,614 $ 243,716 $ 298,942 Interest on mortgage -backed securities 1,891 3,717 9,154 19,803 Interest and dividends on investments 2,435 3,304 11,008 15,187 -------- ---------- --------- --------- Total interest income 62,438 76,635 263,878 333,932 -------- ---------- --------- --------- Interest expense: Interest on deposits 13,166 19,878 60,808 94,568 Interest on borrowings 14,210 22,733 67,611 107,186 -------- ---------- --------- --------- Total interest expense 27,376 42,611 128,419 201,754 Net interest income 35,062 34,024 135,459 132,178 Provision for loan losses -- -- -- -- -------- ---------- --------- --------- Net interest income after provision for loan losses 35,062 34,024 135,459 132,178 -------- ---------- --------- --------- Other income: Loan servicing and other fees 1,263 841 4,325 3,319 Retail office fees 1,256 1,151 4,604 3,791 Gain on sale of loans 1,242 155 7,806 656 Real estate operations, net 206 (79) 339 304 Other operating income 203 184 1,000 849 -------- ---------- --------- --------- Total other income 4,170 2,252 18,074 8,919 -------- ---------- --------- --------- Non-interest expense: Compensation 8,152 7,357 32,627 29,682 Occupancy 2,158 2,122 8,557 8,302 Amortization of core deposit intangible 498 448 1,962 1,564 Other expenses 3,753 3,781 15,066 13,626 -------- ---------- --------- --------- Total non-interest expense 14,561 13,708 58,212 53,174 -------- ---------- --------- --------- Earnings before income taxes 24,671 22,568 95,321 87,923 Income tax provision 10,380 9,658 40,149 37,621 -------- ---------- --------- --------- Net earnings $ 14,291 $ 12,910 $ 55,172 $ 50,302 ======== ========== ========= ========= Other comprehensive earnings (loss), net of taxes (390) (561) (790) 5,149 -------- ---------- --------- --------- Comprehensive earnings $ 13,901 $ 12,349 $ 54,382 $ 55,451 ======== ========== ========= ========= Earnings per share: Basic $ 0.85 $ 0.75 $ 3.22 $ 2.92 ======== ========== ========= ========= Diluted $ 0.83 $ 0.73 $ 3.15 $ 2.85 ======== ========== ========= ========= Weighted average shares outstanding: Basic 16,888,883 17,283,591 17,149,712 17,234,591 ========== ========== ========== ========== Diluted 17,236,018 17,619,704 17,506,129 17,645,647 ========== ========== ========== ==========
4 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL HIGHLIGHTS Quarter ended December 31, 2002 2001 --------- -------- (Dollars in thousands, except per share data) End of period: Total assets $ 4,253,729 $ 4,726,382 Cash and securities $ 148,254 $ 284,615 Mortgage-backed securities $ 200,585 $ 284,079 Loans $ 3,769,235 $ 4,004,889 Core deposit intangible asset $ 9,323 $ 12,750 Deposits $ 2,527,026 $ 2,546,647 Borrowings $ 1,322,273 $ 1,808,040 Stockholders' equity $ 371,641 $ 325,678 Book value per share $ 21.95 $ 18.88 Tangible book value per share $ 21.40 $ 18.14 Stock price (period-end) $ 28.95 $ 25.63 Total loan servicing portfolio $ 4,123,602 $ 4,436,112 Loans serviced for others $ 197,250 $ 257,629 % of Adjustable mortgages 71.46% 71.38% Other data: Employees (full-time equivalent) 497 506 Branches 29 29 Loan production offices 4 4 Asset quality: Real estate (foreclosed) $ 319 $ 1,485 Non-accrual loans $ 6,722 $ 6,443 Non-performing assets $ 7,041 $ 7,928 Non-performing assets as a percent of total assets 0.17% 0.17% General valuation allowance (GVA) $ 75,223 $ 72,919 Allowance for impaired loans $ 496 $ 1,850 --------- --------- Allowances for loan losses $ 75,719 $ 74,769 Allowances for loan losses as a percent of gross loans receivable 1.96% 1.83% Loans sold with recourse $ 108,606 $ 137,204 GVA for loans sold with recourse $ 6,900 $ 12,824 GVA as a percent of loans sold with recourse 6.35% 9.35% Modified loans (not impaired) $ 2,299 $ 927 Impaired loans, net $ 1,071 $ 7,394 Capital ratios: Tangible capital ratio 8.05% 6.42% Core capital ratio 8.05 6.42 Risk-based capital ratio 14.53 12.51 Net worth to assets ratio 8.74 6.89
5 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY KEY FINANCIAL HIGHLIGHTS (continued) Three months ended Twelve months ended December 31, December 31, ---------------------- --------------------- 2002 2001 2002 2001 --------- ----------- --------- ---------- Selected ratios: (Dollars in thousands) Expense ratios: Efficiency ratio 38.71% 37.95% 39.95% 37.86% Expense-to-average-assets 1.36 1.18 1.31 1.17 ratio Return on average assets 1.33 1.11 1.24 1.10 Return on average equity 15.65 16.19 15.82 16.93 Yields earned and rates paid: Average yield on loans and mortgage-backed securities 6.05% 6.91% 6.18% 7.61% Average yield on investment portfolio (1) 3.86 3.96 3.65 5.16 Average yield on all interest-earning assets (1) 5.97 6.76 6.08 7.50 Average rate paid on deposits 2.08 3.24 2.42 4.08 Average rate paid on borrowings 4.02 4.85 4.39 5.67 Average rate paid on all interest-bearing liabilities 2.76 3.93 3.16 4.79 Interest rate spread 3.21 2.83 2.92 2.71 Effective net spread 3.38 2.99 3.09 2.90
Average balances: Average loans and mortgage-backed securities $ 3,961,612 $ 4,225,715 $ 4,091,852 $4,181,554 Average investments (2) 150,729 229,831 172,996 200,807 --------- --------- --------- --------- Average interest-earning assets (2) 4,112,341 4,455,546 4,264,848 4,382,361 --------- --------- --------- --------- Average deposits 2,515,045 2,432,038 2,517,366 2,317,744 Average borrowings (3) 1,350,902 1,831,462 1,518,283 1,885,426 --------- --------- --------- --------- Average interest-bearing liabilities 3,865,947 4,263,500 4,035,649 4,203,170 --------- --------- --------- --------- Excess of interest-earning assets over interest- bearing liabilities $ 246,394 $ 192,046 $ 229,199 $ 179,191 ========= ========= ========= ========= Loan originations and purchases $ 417,713 $ 271,738 $ 1,288,772 $1,502,335
(1) Excludes FHLB stock dividends and other miscellaneous items. (2) Excludes FHLB stock. (3) Excludes accrued interest on tax assessment. 6